Class Actions

Question 1

What is a class action?

Answer 1

A class action allows a named plaintiff to litigate claims and defenses of similary situated persons in a single lawsuit, and the resulting judgment binds all of the “unnamed” parties who are members of the class

Simply another form of joinder; the procedure aggregates claims and defenses that the named represenative and class members share in common, but which any individual litigant alone might not be able to pursue because of the expense and inconvenience of litigation

Question 2

What happens to all the other parties to the suit?

Answer 2

Not all parties in the class action appear in person before the court, rather the named, “representative” acts as a proxy for strangers who do not initially know the lawsuit has been filed yet

Question 3

What is the class action Rule 23?

FRCP 23

Answer 3

Adopted in 1938, the rule made class actions available in both legal and equitable actions in federal courts

In 1966, it was amended to substitute functional tests for the conceptual categories and to provide procedural guidance for the courts about handling class actions

Question 4

When is a class action judgment binding?

FRCP 23

Answer 4

A judgment in binding on all class members, except those in cases in which the right to opt out of the lawsuit applies and has been exercised

Question 5

How do you effectively bind absent parties?

Hansberry v. Lee

Answer 5

In order to bind absent parties, the absent party must be adequately represented in order to be bound by that judgment

Question 6

What has to occur before an absent party can be bound by a judgment?

Mullane

Answer 6

The Supreme Court held that due process required that individual notice be given to those parties whose names and addresses were known, and constructive notice if that information was not reasonably available

Question 7

What is the operation of Rule 23?

FRCP 23

Answer 7

The caption specifies the named representative plaintiff and indicates that the lawsuit is being filed on behalf of a class. The complaint alleges the claims of the named plaintiff and sets forth classwide allegations of the unnamed class members

Question 8

What are the prerequisites of certification?

FRCP 23(a)

Answer 8

There are 4 conditions that must be met before being certified:
(1) Commonality; same question of law and fact;
(2) Numerosity; class is so numerous;
(3) Typicality; not identical but related/similar; and
(4) Adequacy; representatives need to fairly and adequately represent all members of the class

The party seeking to invoke the rule has the burden of showing by a preponderance of evidence that the requirements are met

Question 9

What is the test for numerosity?

Answer 9

Generally, numerosity has both a quantitative and qualitative aspect; 20 members of the class might be too small but 40 might suffice

Question 10

What is the typicality inquiry look at?

Answer 10

Looks to whether “the class representatives are sufficiently similar to the rest of the class-in terms of their legal claims, factual circumstances, and state in the litigation- so that certifying those individuals to represent the class will be fair to the rest of the proposed class

Whether their claims are typical to the entire class

Question 11

What must be present before a representative can litigate on behalf of the group?

Answer 11

There must be enough congruence between the named representative’s claim and that of the unnamed members of the class to justify allowing the named party to litigate on behalf of the group

Rule 23(a)(4) requires that the named plaintiff “fairly and adequately represent/protect the interests of the class

Question 12

What are the three types of class actions?

Rule 23(b)

Answer 12

(A) 23(b)(1): “Prejudice” Class Actions
(B) 23(b)(2): Injunctive and Declaratory Relief
(C) 23(b)(3)

Question 13

What does the Prejudice Class Action consist of?

FRCP 23(b)(1)

Answer 13

(1) Generally does not require notice at the certification stage and does not provide opt-out rights to absentees; for this reason, they are sometimes referred to as “mandatory” class actions
(2) Not appropriate when plaintiffs are primarily seeking monetary damages but appropriate only when the class primarily seeks relief that typically acts as an injunction or declaration

Subdivison (A) focuses on prejudice to defendant; deals with the risk that individual actions would create “incompatible standards of conduct” for the party opposing the class
Subdivision (b) focuses on prejudice to the absentees; authorizes certification when individual actions “would be dispositive to the interests” or “substantially impair or impede” the ability of nonparties to protect their interests

Question 14

What does Injunctive and Declaratory Relief class actions consist of?

FRCP 23(b)(2)

Answer 14

(1) Generally does not require notice at the certification stage and does not provide opt-out rights to absentees; for this reason, they are sometimes referred to as “mandatory” class actions
(2) Seeks injunctive or declaratory releif to change defendant’s conduct prospectively rather than to provide individual compensation to the class members for past harms
(3) Defendant’s conduct need only apply generally to the class; perfect harmony amongst the class members is not required

As required from (b)(3), class-predominance, superiority, mandatory notice, and the right to opt-out are missing from (b)(2)

This stops someone from doing something or receiving a court order for something; to stop future harm

Question 15

What does Damages for Class Actions consist of?

FRCP 23(b)(3)

Answer 15

(1) seeks damages for injuries caused by the same defendant
(2) requires class members to share questions of law and fact that predominate over any questions affecting only individual members; must show that this is a superior mode of adjudication
(3) requires notice and opt-out rights in all cases

This is for monetary relief

Question 16

What are the two differences among the types of class actions?

Answer 16

(1) Whether the absentee class members must be given an opportunity to “opt-out” of the class; and
(2) Whether and when individual notice mut be given to each absentee at the certification stage about claims, defenses, exit rights, and other matters

Question 17

What is a hybrid class action?

Answer 17

Parties can have more than 1 of the 3 types

The court has held that due process requires notice and an opportunity for exit. if the claims involve “money damages or similar relief at law”

Question 18

What is a certification decision?

FRCP 23(c)

Answer 18

The district court must issue a certification order granting or denying certification and defining the class

Question 19

What are some rules for certification decisions?

Answer 19

23(c)(4): the court may choose to certify an “issue class” that is, it may permit the case to be “maintained as a class action with respect to particular issues.”
23(g): the certification order addresses the notice that is to be given to the absent class members and appoints class counsel

This makes a determination on how and what is required for a certification order

Question 20

How is a class defined?

Answer 20

The order needs to have a definition-definition needs to be precise, objective, and presently ascertainable
It must not require extensive factual inquiry to determine who is a class member

Having a clear definition protects absentees by identifying recipients of notice when required; it protects the parties and the court by facilitating claim preclusion; and it saves judicial resources by making the definition easy to administer

Question 21

When is notice required for all types of class actions?

Answer 21

Notice at the back-end of the lawsuit, at the time of settlement, or dismissal, applies to all types of class actions but are less demanding than at the front-end when certification is ordered

Question 22

What does the content and delivery notice in a class action entail?

Answer 22

(1) Notice must be clear, concise, and must be easily understood
(2) Notice must be given to all class members and must be directed in a reasonable manner (front-end and back-end notice differs)
(3) Notice must be complete and accurate and it must provide enough information or opportunities to access information to make their own conclusion about what serves their interests

Question 23

How is the cost of notice divided?

Answer 23

The cost of providing certification notice is on the party seeking class treaetment; unless the cost of carrying out the task is so insubstnatial as to make it inconvenient to shift all the costs to plaintiff

Defendant typically reimburses the cost of notice at a settlement stage

Question 24

What are some details about appointing class counsel?

FRCP 23(g)

Answer 24

(1) The court certification order makes such appointment;
(2) the court can designate intermi counsel before certification has been given; and
(3) Class action attorneys exercise unusually significant control over decisions made on behalf of the vlas, and has authority to settle and action- subject to court’s approval

Question 25

What are interlocutory appeals from certification orders?

FRCP 23(f)

Answer 25

This rule allowed an interlocutory appeal from an order granting or denying class certification; the decision to grant appeal rests with the Court of Appeal

Requires a petition to appeal be filed within 14 days after the order granted or denying certification is ordered

Question 26

What three factors do the courts consider when granting or denying an appeal?

Answer 26

(1) an appeal ordinarily should be permitted when a denial of class status effectively ends the case;
(2) an appeal ordinarily should be permitted when the grant of class status raises the stakes of litigation so substntially that the defendant likely will feel irresistible pressure to settle; and
(3) an appeal ordinarily should be permitted when it will give clarification of a fundamental issue of law

Question 27

What are Orders Regulating the Conduct of Pretrial and Trial Proceedings?

FRCP 23(d)

Answer 27

This authorizes the district court to issue orders regulating the conduct of class action proceedings:
(1) the court may create a timetable for discovery and presentation of issues at trial;
(2) set time limits on oral presentations;
(3) establish a committee of counsel to make decisions; and
(4) regulate the substantive aspects of discovery

Question 28

What are some approaches that courts use if aspects of a class suit varies with the relief sought?

Answer 28

(1) Use a single trial to determine defendant’s liability and the amount of damages; this determines how to distribute the class award amongst members;
(2) bificurated trial; first trial speaks on liability, and second trial addresses damages if defendant is found liable;
(3) Sampling; selecting individual cases at random and combines the outcomes of the samples to yield results for the larger class population; and
(4) “Fluid Class Recovery”; used to provide a general benefit to class members evenly, rather than individual compensation

Question 29

What is a Settlement or Compromise of a Class Suit allow a court to do?

FRCP 23(e)

Answer 29

Imposes an obligation on the district court to approve any decision to settle, dismiss, or compromise a class action

(1) Due process demands that an absent class member be protected from unfair settlements made by the representative losing their enthusiasm for litigation or gaining a substantial benefit for the outcome; and
(2) The action must take proper accounts of the rights of the absent class members

Question 30

How does the court assess if the settlement is fair, reasonable, and adequate?

Answer 30

(1) The merits of the case weighted against the terms of the settlement;
(2) defendant’s financial condition;
(3) the expense and complexity of continuing to litigate the suit; and
(4) the opposition to the settlement

Whether a class as a whole favors the proposed settlement is important but can be approved over the objections of the class representatives

Question 31

What is the Class Action Fairness Act (CAFA)?

Answer 31

Imposes special requirements on settlements that rely on coupons.

Coupons permit the class members to purchase goods at a discount from defendant

Question 32

Under CAFA, what special subject matter rules apply to class certified under that statute?

Answer 32

(1) Amount in controversy: authorizes federal jurisdiction over class actions in which the amount exceeds $5 million. Aggregation is allowed of individual claims seeking to meet the amount requirement; and
(2) Diversity of Citizenship: authorizees federal jurisdiction when showing that the state of citizenship of any member of the plaintiff class is different that the state of citizenship from any defendant

CAFA denies jurisdiction when more than 2/3 of the plaintiffs are from the same state the original action was filed
*Any defendant may remove a case regardless of the consent of other defendant’s and allows a defendant to remove even if the party is a citizen of the state in which the suit was first brought

Question 33

How are attorney’s fees awarded in class actions suits?

FRCP 23(h)

Answer 33

This rule authorizes the court to award a reasonable attorney’s fee in the action.
There are different approaches:
(1) common recovery fund where the court applies a % to the fund to determine amount awarded;
(2) A “lodestar”: looks to # of hours expended, multiplied by the hourly rate, and adjusted based on riskiness of lawsuit and quality of performance

Question 34

What does the predominance inquiry test?

FRCO 23(b)(3)

Answer 34

Tests whether the proposed classes are sufficiently cohesive to warrant adjudication by representation

This applies to certain cases alleging consumer or security fraud or violations of the antitrust laws, even mass torts

This protect unnamed class members from unjust and unfair settlements affects their rights

Question 35

How do class actions affect subject matter jurisdiction?

Answer 35

With class action based on diversity, it raises two special questions:
(1) to which class members should the court look in determining whether there is diversity of citizenship; and
(2) to which class members should the court look in calculating the jurisdictional-amount requirement

Look at the named parties for diversity jurisdiction purposes; and as long as the plaintiff meets the amount, and it arises from a common nucleus of fact, the other claims can get added in (supplemental jurisdiction)

Question 36

How does preclusive efffect affect class action suits?

Answer 36

Class action plaintiffs could not bring other lawsuit on the same issue later on, individually or on another class action; and class members can’t relitigate this

Question 37

What does class action waivers do?

Answer 37

It is what defendants and prospective defendants can do to defend themselves

Parties can waive class action rights; Courts will usually honor these contracts even if it goes against the consumer protection

Question 38

Overall, what are the 3 types of class actions?

Answer 38

(1) Certified: or regular litigation (settlement proposals);
(2) subject matter uniwue provisions; protects absent class members because they may be bound by an extent; and
(3) Class Actiona Fairness Act: 100 people or more for class actions